B-144051, OCT. 13, 1960

B-144051, OCT. 13, 1960

TO MR. GRANT BLOODGOOD, ASSISTANT COMMISSIONER AND CHIEF ENGINEER, BUREAU OF RECLAMATION:

REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 20, 1960, WITH ENCLOSURES, REQUESTING OUR DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE CHAS. C. STEWARD MACHINE COMPANY, BIRMINGHAM, ALABAMA, ALLEGES IT MADE IN ITS BID OPENED ON AUGUST 25, 1960.

THE RECORD SHOWS THAT BY INVITATION FOR BIDS NO. DS-5370, ISSUED BY THE BUREAU OF RECLAMATION UNDER DATE OF JULY 21, 1960, BIDS WERE INVITED FOR THE FURNISHING OF BULKHEAD GATE FRAMES AND ANCHORAGE FOR THE RIVER OUTLETS -INTAKES AT THE GLEN CANYON DAM, COLORADO RIVER BASIN PROJECT. THE INVITATION REQUESTED BIDS ON EITHER OR BOTH OF ITS TWO SCHEDULES, NO. 1 PROVIDING FOR THE FURNISHING OF TWO BULKHEAD GATE FRAME ASSEMBLIES, AND NO. 2 FOR ONE LOT OF ANCHOR BOLTS FOR THE BULKHEAD GATE FRAMES.

THE ABSTRACT OF BIDS TRANSMITTED WITH YOUR LETTER COVERED THIRTEEN OF THE BIDS RECEIVED IN RESPONSE TO THE INVITATION. IT WAS STATED IN YOUR LETTER THAT THIS ABSTRACT DID NOT REFLECT TWO OF THE BIDS RECEIVED, WHICH OFFERED EQUIPMENT TO BE MANUFACTURED IN SWITZERLAND AND WEST GERMANY, SINCE THE INVITATION LIMITED THE POTENTIAL CONTRACTOR TO SMALL BUSINESS CONCERNS.

THE RECORD SHOWS THAT FOR SCHEDULE NO. 1 THE BIDS QUOTED PRICES RANGING FROM A LOW BID OF $39,100, F.O.B. SHIPPING POINT, EVALUATED AT $41,186.80, INCLUDING GOVERNMENT FREIGHT CHARGES ON THE GUARANTEED SHIPPING WEIGHT, SUBMITTED BY THE STEWARD MACHINE COMPANY, TO A HIGH BID OF $120,000, F.O.B. DESTINATION, EVALUATED AT $119,400 REFLECTING PROMPT PAYMENT DISCOUNT OF 1/2 PERCENT. THE SECOND LOW BID WAS SUBMITTED BY THE OMAHA STEEL WORKS, OMAHA, NEBRASKA, AT AN F.O.B. DESTINATION PRICE OF $43,393. THE ENGINEER'S ESTIMATE WAS $50,000.

FOR SCHEDULE NO. 2 THE BIDS QUOTED PRICES RANGING FROM A LOW BID OF $1,900, F.O.B. DESTINATION, SUBMITTED BY THE FULTON SHIPYARD, ANTIOCH, CALIFORNIA, TO A HIGH BID OF $6,200, F.O.B. DESTINATION. THE SECOND LOW BID FOR THIS SCHEDULE WAS SUBMITTED BY THE JOHNSON MACHINE WORKS, INC., CHARITON, IOWA, AT AN F.O.B. DESTINATION PRICE OF $2,259. THE ENGINEER'S ESTIMATE WAS $2,000. FOR A COMBINATION OF SCHEDULES NOS. 1 AND 2, THE STEWARD MACHINE COMPANY QUOTED AN F.O.B. SHIPPING POINT PRICE OF $41,800, REPRESENTING A COST TO THE GOVERNMENT OF $44,140.88, INCLUDING GOVERNMENT FREIGHT COSTS ON GUARANTEED SHIPPING WEIGHTS.

YOU REPORT THAT UNDER DATE OF AUGUST 31, 1960 (SIX DAYS AFTER BID OPENING) THE STEWARD COMPANY TELEPHONED YOUR OFFICE STATING THAT ITS BID PRICE OF SCHEDULE NO. 1 WAS ERRONEOUS AND SHOULD HAVE BEEN THE SUM OF $42,525, INCLUDING AN AMOUNT OF $3,425 FOR STEEL REQUIRED IN ADDITION TO THAT COMPUTED BY THE COMPANY DUE TO ITS MISINTERPRETATION OF ONE OF THE DRAWINGS, AND ALSO THAT THE BID SHOULD HAVE STATED A GUARANTEED SHIPPING WEIGHT OF 146,000 POUNDS INSTEAD OF THE 111,000 POUNDS ACTUALLY STATED. RESPECTING THE ALLEGED ERROR IN SHIPPING WEIGHT, YOU STATED THAT YOU HAD PREVIOUSLY NOTED THE LOW WEIGHT GUARANTY BY THE STEWARD COMPANY--- THE SHIPPING WEIGHT HAVING BEEN ESTIMATED BY YOUR OFFICE AT 146,000 POUNDS.

BY LETTER DATED AUGUST 31, 1960, THE STEWARD COMPANY CONFIRMED ITS ALLEGATION OF ERROR, STATING THAT IT HAD MISINTERPRETED TWO OF THE DRAWINGS AND CONSEQUENTLY HAD ESTIMATED FOR ONLY FIFTY PERCENT OF THE STEEL ACTUALLY REQUIRED FOR CERTAIN OF THE ITEMS. WITH ITS LETTER THE COMPANY ENCLOSED THREE SHEETS REFLECTING ITS COSTS AND PRICES FOR THE EQUIPMENT OFFERED, AND REQUESTED THAT ITS BID BE DISREGARDED.

BY A FURTHER LETTER DATED SEPTEMBER 8, 1960, THE STEWARD COMPANY ADVISED THAT IT WAS WILLING TO ACCEPT AN AWARD OF SCHEDULES NOS. 1 AND 2 TOGETHER AT ITS ORIGINALLY QUOTED COMBINATIONS F.O.B. SHIPPING POINT PRICE OF $41,800, PROVIDED THAT ITS ORIGINALLY STATED GUARANTEED SHIPPING WEIGHT OF 111,000 POUNDS FOR SCHEDULE NO. 1 WERE INCREASED TO THE PROPER WEIGHT OF 146,000 POUNDS. YOU POINTED OUT THAT IF THIS WERE DONE, THE AMOUNT FOR COMPARISON OF ITS COMBINATION PRICE WOULD STILL BE LOW.

IN SUPPORT OF THE FOREGOING REQUEST, THE STEWARD COMPANY IN ITS LETTER OF SEPTEMBER 8, 1960, QUOTED AN EXCERPT FROM THE "TERMS AND CONDITIONS OF THE INVITATION FOR BIDS," AS FOLLOWS:

"* * * HOWEVER, A MODIFICATION WHICH IS RECEIVED FROM AN OTHERWISE SUCCESSFUL BIDDER AND WHICH MAKES THE TERMS OF THE BID MORE FAVORABLE TO THE GOVERNMENT WILL BE CONSIDERED AT ANY TIME IT IS RECEIVED AND MAY THEREAFTER BE ACCEPTED.'

YOU EXPRESSED THE VIEW THAT THE OFFER MADE BY THE STEWARD COMPANY IN ITS LETTER OF SEPTEMBER 8, 1960, IS UNACCEPTABLE SINCE IT DOES NOT MAKE MORE FAVORABLE TO THE GOVERNMENT THE TERMS OF THE BID AS THEY WERE AT THE BID OPENING TIME. YOU ALSO STATED THAT EVEN THOUGH THE DOCUMENTS SUBMITTED SUPPORT THE BIDDER'S ALLEGATION OF ERROR, THEY ALSO REFLECT SEVERAL DISCREPANCIES AND FAIL TO CLEARLY SUPPORT THE ALLEGATION THAT THE BIDDER INTENDED TO QUOTE A PRICE OF $42,525 FOR SCHEDULE NO. 1. UPON THE BASIS OF THE FOREGOING FACTS YOU REQUESTED TO BE ADVISED WHETHER THE STEWARD COMPANY'S BID SHOULD BE DISREGARDED OR, IF NOT, ON WHAT TERMS IT SHOULD BE ACCEPTED FOR EITHER SCHEDULE NO. 1 OR FOR THE COMBINATION OF SCHEDULES NOS. 1 AND 2.

WE ARE OF THE VIEW THAT A CONTRACT SHOULD NOT BE AWARDED TO THE STEWARD MACHINE COMPANY ON THE BASIS OF THE OFFER SET FORTH IN THE LETTER OF SEPTEMBER 8, 1960, BUT THAT IN VIEW OF THE ERROR ESTABLISHED ITS BID MAY NOT BE ACCEPTED AS SUBMITTED.

IF CORRECTION OF THE BID COULD BE PERMITTED, THE CORRECTED PRICE OF $42,525, F.O.B. SHIPPING POINT, WOULD PRODUCE A COST TO THE GOVERNMENT IN EXCESS OF THAT AVAILABLE FROM OTHER BIDDERS, EITHER ON SCHEDULE NO. 1 OR ON THE COMBINATION.

IN ITS LETTER OF SEPTEMBER 8, 1960, THE STEWARD COMPANY INDICATED ITS WILLINGNESS TO ACCEPT AN AWARD OF $41,800 FOR BOTH SCHEDULES NOS. 1 AND 2, PROVIDED THAT IT IS PERMITTED TO RAISE ITS GUARANTEED WEIGHT OF SCHEDULE NO. 1 TO 146,000 POUNDS. IN OTHER WORDS, THE COMPANY IS WILLING TO FOREGO ITS CLAIM OF ERROR AS TO THE QUANTITY OF STEEL REQUIRED, BUT CONDITIONS ITS OFFER UPON AN INCREASE IN THE SHIPPING WEIGHT WHICH WOULD RESULT IN INCREASED COST TO THE GOVERNMENT. THERE WAS SET FORTH IN THE LETTER A COMPUTATION SHOWING THAT, ON THE BASIS OF THE REVISED PROPOSAL, AND IF AN AWARD WAS MADE TO THE STEWARD COMPANY ON THE TERMS STATED, THE GOVERNMENT WOULD EFFECT A SAVING OF $544--- STATED TO BE THE DIFFERENCE BETWEEN THE COST BASED ON THE COMPANY'S REVISED PROPOSAL AND THE PRICE QUOTED BY THE OMAHA STEEL WORKS. THIS PROPOSAL CANNOT BE REGARDED AS ANYTHING EXCEPT A NEW BID, SINCE IT IS NEITHER THE BID SUBMITTED NOR THE ONE ALLEGED TO HAVE BEEN INTENDED.

IT IS A FIRMLY-ESTABLISHED RULE THAT A BIDDER UNDER A GOVERNMENT INVITATION CANNOT CHANGE HIS BID AFTER OPENING. CORRECTION OF AN ERRONEOUS BID IS NOT CONSIDERED TO BE AN EXCEPTION TO THE RULE, BUT RATHER AS THE SUBSTITUTION OF AN INTENDED BID, ESTABLISHED BY VIRTUALLY CONCLUSIVE EVIDENCE, FOR THE ONE ERRONEOUSLY STATED. THE PROVISION, QUOTED ABOVE, PERMITTING CONSIDERATION OF A MODIFICATION SUBMITTED BY AN "OTHERWISE SUCCESSFUL BIDDER" IF IT MAKES THE BID "MORE FAVORABLE TO THE GOVERNMENT," IS NOT FOR APPLICATION IN THE EVALUATION OF BIDS, (WHEN THE MODIFICATION IS RECEIVED AFTER OPENING) BUT COMES INTO PLAY ONLY AFTER EVALUATION AND DETERMINATION OF THE BIDDER ENTITLED TO THE AWARD. AT THAT POINT HIGHER BIDDERS HAVE NO FURTHER INTEREST, AND THE GOVERNMENT MAY PROPERLY ACCEPT A VOLUNTARY OFFER OF A PRICE OR TERMS MORE ADVANTAGEOUS TO THE GOVERNMENT THAN THOSE OF THE SAME BIDDER WHICH WOULD OTHERWISE BE FOR ACCEPTANCE. IN THE PRESENT CASE, THE STEWARD COMPANY IS NOT THE "OTHERWISE SUCCESSFUL BIDDER," SINCE IN VIEW OF ITS SHOWING OF ERROR ITS ORIGINAL BID COULD NOT BE ACCEPTED. NOR IS ITS MODIFIED PROPOSAL "MORE FAVORABLE TO THE GOVERNMENT," SINCE THAT IS TO BE DETERMINED BY COMPARISON WITH ITS OWN BID AS SUBMITTED, AND NOT WITH THE BIDS OF OTHER BIDDERS.

FOR THE REASONS STATED, THE BID OF THE STEWARD COMPANY SHOULD BE DISREGARDED IN MAKING AWARD IN THIS CASE.

IN ACCORDANCE WITH YOUR REQUEST, THE ENCLOSURES TO YOUR LETTER ARE RETURNED HEREWITH.